Report says $11 minimum wage would cost Massachusetts $1.16 billion

Wednesday

Nov 20, 2013 at 12:01 AMNov 20, 2013 at 8:03 PM

As state senators began debating a bill raising the minimum wage from $8 to $11 an hour, a research organization rolled out an interactive tool that allows users to estimate how many people would be affected by the policy change and the costs associated with proposed wage floor levels.

Michael Norton

As state senators began debating a bill raising the minimum wage from $8 to $11 an hour, a research organization rolled out an interactive tool that allows users to estimate how many people would be affected by the policy change and the costs associated with proposed wage floor levels.

For instance, the Massachusetts Budget and Policy Center (MBPC) calculator estimates 589,000 people across the state would see an increase in their wages — 485,000 directly and 104,000 indirectly — if the minimum wage were raised to $11 an hour by 2016, as is proposed in the three-step wage increase bill pending in the Senate.

Under that bill, the total increase in wages by 2016 would be $1.16 billion. The first step of the proposed minimum wage hike — to $9 an hour in 2014 — would increase the wages of 284,000 people at a total cost of $201 million.

The tool also enables users to break down impacts of a minimum wage hike by race, gender, income and education.

In a separate report, the center estimated a full-time minimum wage worker in Massachusetts makes $16,000 in 2013, about $5,000 less than he or she would earn if the minimum wage had been adjusted for inflation since 1968.

The center estimates less than 10 percent of the workforce in communities like Newton, Brookline, Needham and Wellesley would be affected by a minimum wage hike to $10.50 an hour.
By contrast, more than 20 percent of the workforce would be affected in most of western Massachusetts, Worcester, Leominster, Fitchburg Central Cape Cod, New Bedford, Attleboro, Taunton, Brockton, Somerville-Everett, Malden-Medford, Chelsea, Revere, Winthrop, Lynn, Lawrence, and Lowell.

In a letter to senators Tuesday, Retailers Association of Massachusetts President Jon Hurst said the proposed wage hike would hurt the ability of Massachusetts businesses to compete with other states and said the Massachusetts minimum wage should remain in line with similar wage laws around the nation, noting $11 would be the highest minimum wage in the U.S.
Hurst estimated 50 percent fewer teens are working in Massachusetts today compared to more than a decade ago, asserting that a high minimum wage and the requirement that retailers pay time and a half pay to employees who work on Sunday are “job killers for Massachusetts youth.”

In opening arguments for the bill, Sen. Dan Wolf (D-Harwich), co-chairman of the Labor and Workforce Development, said the top 1 percent of earners in the United States have reaped 95 percent of the gains in the most recent economic recovery, while full-time minimum wage earners are “living in poverty.”

Wolf predicted a higher minimum wage indexed to inflation would strengthen the middle class, neighborhoods, the government, the state’s tax base and the “moral foundation” of Massachusetts.
Senate Minority Leader Bruce Tarr (R-Gloucester) said Massachusetts currently has the eighth highest minimum wage in the nation. A 37.5 percent increase in the minimum wage is contemplated under the bill, said Tarr, who called for debate over “how best to increase the minimum wage” rather than on whether it should be raised. Tarr said senators, by not addressing other business costs in its bill, were considering the wage floor hike “in a vacuum.”

House leaders have expressed a preference to consider a minimum wage hike proposal in connection with unemployment insurance system reforms sought by business groups.